For income investors, there’s a solid stock that pays a handsome dividend and, due to a recent decline in its share price, is trading at a bargain-basement price. I’m talking about Sanofi (SNY -1.21%), the French multinational pharmaceutical that is focused on immunology, vaccines, and rare diseases.
The stock pays a $0.61 quarterly dividend, yielding about 5.4% (the annual dividend divided by the share price). That’s a handsome yield by any measure. And when you factor in the impact of the company’s stock buybacks, that yield rises to near 11%. And the company has raised its dividend for 30 consecutive years, making it a member of the European Dividend Aristocrats® (a registered trademark of Standard & Poor’s Financial Services LLC).
And yet, Sanofi’s share price is down about 6.5% this year. Part of that is because the drugmaker canceled several major late-stage programs, raising valid investor concerns about its drug pipeline. Does that spell opportunity now for investors? Let’s see.
Today’s Change
(-1.21%) $-0.56
Current Price
$45.47
Key Data Points
Market Cap
$110BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.
Day’s Range
$45.45 – $46.04
52wk Range
$40.89 – $52.68
Volume
1M
Avg Vol
3.3M
Gross Margin
66.29%
Dividend Yield
5.26%
Sanofi beat revenue and earnings expectations in the most recent quarter
But the company recently posted strong second-quarter results. It earned $1.22 a share on revenue of $13.48 billion, both of which beat analysts’ expectations. And sales of its blockbuster immunology drug, Dupixent, climbed 38% to 5.15 billion euros, surpassing 5 billion euros in a quarter for the first time.
But investors considering Sanofi’s shares need to look forward, not back. And the company just got some very good news: In July, the U.S. Food and Drug Administration (FDA) approved the company’s on-body injector for isatuximab, sold under the brand name Sarclisa, which treats multiple myeloma, a type of bone marrow and blood cancer.
As a result, the stock has rebounded in recent weeks and is up about 6% so far in August.
Image source: Getty Images.
Wall Street thinks it can continue to climb. The average analyst price target for the stock is $53.72, representing a nearly 18% gain from the current share price. Of the 10 analysts who follow the stock, five rate it a “Buy” and five a “Hold.”
And the stock is inexpensive right now, trading at slightly more than nine times forward earnings. Consider that major drugmakers like Eli Lilly (LLY -3.31%), Merck (MRK -1.79%), and Johnson & Johnson (JNJ -1.06%) are all trading at more than 20 times forward earnings.
So, for investors looking for stocks trading cheaply relative to peers that deliver a strong dividend yield and have potential for future price appreciation, Sanofi right now checks all the boxes.